Yahoo Finance TOMI Environmental Solutions, Inc. (NASDAQ:TOMZ) Q4 2023 Earnings Call Transcript
TOMI Environmental Solutions, Inc. (NASDAQ:TOMZ) Q4 2023 Earnings Call Transcript April 1, 2024
TOMI Environmental Solutions, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good afternoon. Thank you for joining us today for the TOMI Environmental Solutions Investor Update Conference Call. On today’s call is TOMI’s Chief Executive Officer and Chairman of the Board, Dr. Halden Shane; TOMI’s Chief Operating Officer, E.J. Shane; and TOMI’s Chief Financial Officer, Nick Jennings. Dr. Shane will provide an overview of recent business highlights, financials, and future plans, E.J. and Nick will be available for the Q&A. A telephone replay of today’s call will be available through April 15, 2024, the details of which are included in the company’s press release dated April 1, 2024. A webcast replay will also be available at TOMI’s website, www.tomimist.com. Please note that information contained within this presentation is relevant only to the date of which it was recorded, April 1, 2024.
And you are therefore advised that time-sensitive information may no longer be accurate at the time of any replay. Certain written and oral statements made by management of TOMI may constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements should be evaluated in light of important risk factors that could cause actual results to differ materially from our anticipated results. The information provided in this conference call is based upon the facts and circumstances known at this time. The company undertakes no obligation to update these forward-looking statements after the date of this call. In addition, TOMI will discuss certain non-GAAP financial measures during this call.
The company uses its non-GAAP measures because it believes they provide useful information about operating performance that should be considered by investors in conjunction with the GAAP measures. A reconciliation of these non-GAAP measures to comparable GAAP measures is included in the earnings release dated April 1, 2023. I will now turn the call over to TOMI’s Chairman and Chief Executive Officer, Dr. Halden Shane. Please go ahead.
Halden Shane: Good afternoon, everyone, and thank you for joining the TOMI Environmental earnings call. I hope everyone had a nice Easter Sunday. Today, we will provide operating and financial results for the full-year 2023 along with an update on a few key current focuses for the company. During our 2023 calendar year, we delivered multiple custom-engineered systems to key customers, diversified our product lines to support our expanding customer base, and the related utilization of our SteraMist technology, and continue to build out our sales infrastructure through the expansion of our distribution network. Our year-over-year revenue declined due to the timing of certain customer orders and the frustrating long approval processes.
There was tremendous progress made in 2023 within the company, and we continue to do business with premier companies around the world. Our list of clients keep getting larger, and our latest product mix with the SteraMist Transport, SteraMist Integrated System, NV Plus, and Hybrid puts us in a great position to provide much improved financial results moving forward. As stated throughout last year, we remain focused on expanding our internal and external sales infrastructure and business development initiatives. Last year, we expanded our presence both domestically, and on an international basis with new customers across our division, independent sales representatives, and broader distribution network to the United States. Most recently in November of 2023, we announced the addition of Sterile Grow, a United States based distributor and consultation company in the food and cannabis market.
Sterile Grow has demonstrated noteworthy achievements in the cannabis and food markets, specializing in controlled environment agriculture, particularly in integrating systems for large scale indoor cannabis cultivation. In November 2023, we entered into consultant agreement with BEAMS, LLC to strengthen and expand the TOMI SteraMist network, and increase business development in the commercial market. BEAMS, LLC brings over 20 years experience establishing strategic vision and direction of large institutions and companies spanning multiple industries, including higher education, not-for-profit, healthcare, consultancy, hospitality, and pharmaceutical sectors. Our sales infrastructure is in a much better place now compared to where we were at last year at this time, and we anticipate the increased bandwidth of our internal and external sales channels will have a positive impact on our revenue in 2024 and beyond.
Demand for our CES has grown as we completed and delivered four CES systems in 2023, expanding our growing portfolio of projects. In the first quarter, we delivered a CES system to Orna Therapeutics, a leading biotechnology company located in Massachusetts. During the second quarter, we delivered an 11 applicator CES system to Avid Bioservices, Avid for implementation and Avid's new purpose built-in viral vector development, and manufacturing facility in Costa Mesa, California. During the third quarter of 2000, we delivered a three applicator CES system to Ragon Institute of MGH, MIT, and Harvard for implementation in their research and clinical lab located in Cambridge, Massachusetts. And in the third quarter of 2023, we delivered our CES hybrid system to Indigo Pharmaceuticals in Las Vegas, Nevada.
We anticipate these additional systems will not only contribute to growth in our solution revenues moving forward, but will also lead to more referrals as they serve as a great marketing tool for us. Our brand recognition continues to grow market share as we march forward towards becoming the standard in the industry. We continue to diversify our base of products in 2023 with the introduction of SteraMist Hybrid and SteraMist Transport to support our ongoing commitment to providing superior disinfection decontamination solutions for our growing customer base. The company remains active in our marketing initiatives and attended and presented our SteraMist brand of products at seven different Trade Shows during the fourth quarter alone. Our in-house service team is performing well.
SteraMist iHP service team saw a year-over-year growth of 13% through December and is continuing to perform well through quarter one of this year. Earlier this month, we announced a new ground breaking study demonstrating the effectiveness of our solution against Foot-and-Mouth Disease Virus, FMDV. This significant advancement supports the company's submission for an additional EPA label. During 2023, we also completed a study conducted in accordance with the U.S. Department of Defense Biological Select Agents and Toxins Biorisk Program Office, which demonstrated SteraMist iHP as an effective technology for decontamination of biological toxoid and a study funded by the USDA and NIFA which demonstrated SteraMist iHP as an effective treatment of Deformed Wing Virus known as DWV contaminated Hive Substrates.
The following are our company's forthcoming initiatives with both new and existing partners, insights into our product development endeavors and our strategies in place to drive revenue growth. Our revenue numbers for 2023 are not an accurate reflection of the progress we made during the year positioning the business for long-term growth. The strength of our pipeline comprised of key players in various industries gives us confidence. Key objectives include closing more CES or custom engineered system sales, driving future revenue growth, ensuring that current CES installations are fully qualified and begin generating the anticipated bit solution revenue, driving traction for the SIS or SteraMist Integrated System, thus fostering repeat business with OEMs of decontamination and closures.
All while maintaining growth of the iHP corporate service revenues and expanding capital equipment purchases of our mobile equipment to both existing and new customers and distributors. To increase the success rate of winning bids for the CES custom engineered system, we are focusing on several key areas. Customers now have many options available to them in the implementation of SteraMist iHP as their decontamination solution. With CES emerging as a preferred choice for many, a crucial factor in securing successful CES bids lies in perfect timing and budget. This involves aligning the design, construction and budget aspects of a project built to create an optimal environment for SteraMist CES or any fully permanent automated system to be their choice.
With these elements aligning our chances of winning these large bids increased significantly. One advantage, TOMI Environmental is currently enjoying is the cultivation of strategic contacts at these important moments. For instance, a recent successful bid wasn't initially solicited for our technology. It was at a primary interest for the end user. However, the designers of the project recommended and preferred our solution leading to a SteraMist win. We are actively entering into more and more relationships with these designers and construction firms to expand our outreach. By staying connected and informed about upcoming projects, we can position ourselves for success. Our internal initiatives aimed at enhancing communication and engagement are well underway, and we are confident that these efforts will yield positive results.
Currently, we are in discussions with many companies regarding approximately 60-plus bids involving some sort of TOMI SteraMist integration over the many coming years, extending beyond the immediate fiscal period. Our second initiative involves ensuring that all 15 installations are operational and generating BIT solution revenue. To-date, the final qualifying steps for six of our 15 installations are coming to a close, with the last expected to be completed by June of this year. We anticipate that once fully functional and operational, BIT solution revenue streams will equate to approximately $600,000 for our current bids only, assuming each facility maintains their current planned production schedules. While the SIS plan translates into less BIT solution revenue than the CES product, due to the smaller scale of enclosures, its significance lies in enhancing TOMI's reputation as a versatile and user-friendly decontamination solution technology.
The ability to offer quick and effective solution for biological safety cabinets, BSCs, decontamination chambers, and various other enclosures for medical devices reinforces our position as a leading decontamination solution provider. We are currently engaged in communication and testing and registration procedures to ensure the efficacy and compliance of these solutions, further solidifying our presence in the market. iHP service revenue has been a steady and reliable source of income for our company, consistently showing growth over time. It serves as our entry point into many organizations, allowing us to showcase the effectiveness of our solution firsthand. Once clients experience the quality of our services, they often choose to engage with us for additional purchases.
However, in today's economic climate, budget considerations often influence decision-making. As a result, many clients opt for routine service treatments that align with their financial plans. This trend reflects the current market dynamics and budget constraints faced by businesses. In addition to these new launches, we anticipate a surge in sales for our legacy surface unit and the well-received SteraPak handheld devices. This growth will be facilitated by collaborative efforts with Patty Olinger of BEAMS in revamping our TOMI service network. SteraMist Pro certified program represents a significant evolution from the TOMI service network. It will not only extend its reach internationally, but also broaden its scope beyond remediation companies to include in-house service providers.
The program will offer top-tier training branches covering various aspects from SteraMist usage to infectious disease management and indoor air quality control. Participation in the program will entail an annual fee, granting access to continuous learning opportunities, regional conferences, and future affiliate products. Additionally, members can expect roundtable discussions and other collaborative platforms to facilitate knowledge sharing and networking. This initiative reaffirms our commitment to providing comprehensive support and resources to our partners worldwide. I want to highlight the ongoing momentum of our partnership initiatives, encompassing collaborations with key entities such as Francis Coppi, ambulance manufacturers, both directly and through our Canadian distributor, Vizient GPO, Nestle, and other committed European distributors, Universal Disinfection.
These partnerships remain pivotal to our growth strategy, providing us with access to new markets a2nd opportunities. We will shortly announce recent developments, including advancement in fentanyl testing capabilities, the pursuit of our new EPA label, whether or not that SteraMist can play a role in controlling the environmental impact of PFOSs and PFOAs, also known as the forever chemicals, along with follow-up on our marking plan and how to take advantage of the loss in the medical sterilization industry as approximately 20 million, I mean, sorry, 20 billion medical devices are sterilized per year with ethylene oxide, and an EPA regulation is restricting its usage, which could create a significant market void that may be filled with alternative sterilization processes, such as TOMI's patented binary ionization technology.
A brief overview of our financial results for the full 2023 compared to the full-year 2022. Our consolidated net revenue was $7,355,000 compared to $8,338,000. The timing of orders, including holidays, the masses of signatures needed for order progression affected our revenue. Consolidated growth profit was 58.3% compared to 60.7%. The decrease in gross profit was due to our product mix, more CES than mobile. The consolidated operating loss was $3,349,000 compared to $2,822,000. Our consolidated net loss was $3,403,000, or $0.17 per basic and diluted share, compared to $2,880,000, or $0.15 per basic share. Moving to the balance sheet as of December 31st, our cash-to-cash equivalent was approximately $2.3 million, working capital was $7.9 million, and our shareholder equity was $8.4 million.
As far as a positive feedback from investors, I was just notified that Highwire, the contractor success platform for builders and owners of capital projects, has just announced the recipient of its prestigious safety award. TOMI Environmental Solutions received the Gold Safety Award, "Management systems are critical to any company's ability to deliver successful outcomes and most importantly, to keep their employees safe." TOMI Environmental Solutions has done a remarkable job implementing a strong safety management system resulting in exceptional safety performance and results. A little about Highwire, it's a contractor success platform for asset owners, general contractors, and facility managers. Some of the world's most admired organizations, including Skanska, which is a Swedish company, has about $15 billion in revenues, Bond Brothers been around since 1886 as a civil infrastructure, and Merck, who we all know, a multinational company based in Germany, active in 66 countries, leading science technology with three sectors, healthcare, life sciences, and electronics.
With that being said, I want to thank you all for joining us today and for your unwavering support as investors and followers of our company. A big thank you to our team around the world who has helped lead the foundation for our company to become the world's leader in disinfection and decontamination space. We are situated correctly with the right conversations taking place to move us forward, replace the archaic methods, and increase the idea of proactive over reactive approaches. We'll now open to questions and answers. Operator?
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